Foreign, Commonwealth and Development Office

Just Energy Transition Guarantee – Indonesia

Mr Andrew Mitchell: It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Minister concerned to present a departmental minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the statement, except in cases of special urgency.I have today laid a departmental minute outlining details of a new liability being undertaken by the Foreign, Commonwealth and Development Office to support Indonesia’s Just Energy Transition Partnership (JETP). This guarantee will support the development of the JETP and reduce the impact of climate change in the region. The new $1bn guarantee facility, which will guarantee additional lending from the World Bank, will be conditional on Indonesia implementing the ambitious commitments to energy transition made as part of the JETP, and on the World Bank reaching its lending limits in Indonesia, which would require the Bank to scale up its financial support for Indonesia’s energy transition significantly over several years. If implemented, the UK guarantee would enable the Bank to lend an additional up to $1 billion to Indonesia at affordable rates.An announcement on the Indonesia Just Energy Transition Partnership will be made at the G20 summit in Bali, which is between 15-16 November 2022. The announcement will note that the guarantee is subject to this parliamentary notification process being completed. The Public Accounts Committee, the Foreign Affairs Committee, and the International Development Committee, have been notified of this.FCDO Ministers and HM Treasury have approved this guarantee proposal. If, during the next 14 parliamentary sitting days, a Member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.

Ministry of Defence

Type 26 Batch 2 Update

Mr Ben Wallace: Today I am providing an update on our plans for the next stage of the Type 26 frigate programme.I am pleased to announce that my Department has placed a contract with a value of around £4.2 billion with BAE Systems to start the manufacture on the Clyde of five Type 26 Batch 2 anti-submarine warfare frigates. This is an excellent deal for the taxpayer and will strengthen and secure the UK shipbuilding enterprise as set out in the National Shipbuilding Strategy.The signing of the contract and the forthcoming cut steel for HMS Birmingham, the fourth ship in the class, are significant steps forward for the Type 26 programme. All three ships of the first batch of frigates are currently under construction in Govan and today’s announcement delivers on the Government’s promise to secure a build contract for the remaining vessels.This Government is acutely aware of the importance of the UK maritime enterprise, particularly during these unprecedented times. The deal that has been negotiated for the Batch 2 ships is structured to motivate both sides to deliver a successful outcome, with both parties sharing in the pain and gain in delivering the programme, ensuring value for public money and, importantly, protecting taxpayers from any project overrun costs.The contract will sustain more than 1,600 highly skilled jobs at BAE Systems on the Clyde, and secure a total of over 4,000 jobs across the supply chain in Britain. BAE have already employed over 500 apprentices on the programme, and plan to further expand and upskill their workforce as the build progresses. With over £1.2 billion of the new order being spent in the wider UK supply chain, the hiring of new apprentices, and an order book stretching into the 2030s this contract provides a stable workstream across the British shipbuilding industry.The Type 26 reference design has been successfully exported to Australia and Canada who are developing the Australian Hunter Class and Canadian Surface Combatants respectively, demonstrating the world class credentials of the platform and providing opportunities for British firms to contribute in the multinational supply chain.The Batch 2 deal also introduces further investment in BAE Systems’ facilities on the Clyde, most obviously demonstrated by the submission of planning application for a new 175m long, 85m wide Shipbuilding Hall at Govan. The new hall will allow two frigates to be built under cover simultaneously and allow the ships to be built faster, improving efficiency in the programme and expanding the facilities for future work at the yard.